Yuanyuan Gu, PhD Senior Research Fellow

1. Will public hospital patients choose a better quality hospital given the choice? A discrete choice experiment AHES Conference 2017 Yuanyuan Gu, PhD Senior Research Fellow Co authors: Henry Cutler, PhD Director Emma Olin Research Fellow CENTRE FOR THE HEALTH ECONOMY

2. Introduction Background and study objectives

3. Background Australia has a mixed public-private hospital system, with around 34% of elective surgery undertaken in public hospitals This has resulted in different access to hospital care based on ability to pay (private health insurance and co-payments) Private patients have absolute choice over hospital and surgeon / specialist. Public patients have virtually no choice. The Australian Government is currently exploring the potential to introduce greater choice into Human Services (incl. public hospitals)

4. Study objectives Would Australians exercise their right to choose a public hospital based on quality vs. convenience? To elicit Australians’ preferences for hospital characteristics in the context of elective surgery.

5. Methodology Survey and discrete choice experiment

6. A national survey • 1,000 Australians aged 50 to 75 years representative by age and gender recruited through Toluna Australia via the Internet • A discrete choice experiment (DCE) presented 12 hypothetical scenarios with two hospitals made up of seven attributes with four levels each • Respondents were asked to choose their most preferred hospital, implicitly revealing their value for attribute levels. • A survey asked questions regarding socioeconomic characteristics, health literacy (self-assessed), attitudes towards the health care system …

7. DCE setting

8. Attributes • Convenience represented by two attributes: • Distance form home to the hospital • Waiting time for elective surgery (levels differ across urgency category) • Opinions represented by two attributes • GP’s opinion of hospital quality • Other patients’ overall rating of the hospital • Quality represented by three attributes • Average patient reported health gain six months after surgery • Rate of adverse events • Readmission rate within 28 days after surgery

10. Example choice set

11. Discrete choice experiment results Preferences for choice attributes

12. Analysis of responses • Conditional logit was used to analyse survey responses. Observed heterogeneity measured using interactions • Forced choice and unforced choice models were compared, with similar results. Unforced choice used given it better represents reality • Relative importance of attribute levels measured by calculating the change in probability of choosing hospital when one attribute level changes, while all other attribute levels remain fixed

13. Summary of results • Respondents value all attributes when choosing between hospitals. They are willing to trade off all attributes with each other • Respondents value hospital quality the most, as measured by reduced adverse events, readmission and potential health gain • Respondents value a GP’s opinion and ‘other patient’ experiences equally • Respondents are risk averse when choosing hospitals. They trade off potential health gains to avoid an adverse event or readmission

14. Summary of results • Respondents trade off less convenience for better quality. They are willing to travel further and wait longer for a better quality hospital • Surgical urgency impacts the value of convenience attributes only. The more urgent, the more valued are shorter distances and shorter waiting times.

15. Relative attribute importance Least important Most important Least important Most important

16. Observed preference heterogeneity • Female respondents dislike a hospital more when a GP rates the hospital as poor • Respondents living outside major cities are more willing to travel longer distances to attend a better quality hospital • Respondents with year 12 or below education are more willing to choose a hospital with lower health gain (value health improvement less) • Respondents with past elective surgery experience are more willing to choose a hospital with lower health gain

17. Policy implications Considerations for introducing greater choice

18. Policy implications • Patients must value quality and exercise their right to choose for increased patient choice to improve public hospital quality • Public hospitals must respond to quality signals from patient choice • Government will need to facilitate both these necessary conditions

19. Thank you Dr Yuanyuan Gu Yuanyuan.Gu@mq.edu.au END This research project was joint funded through funding provided by Macquarie University and the Commonwealth Bank of Australia. Neither Macquarie University or the Commonwealth Bank of Australia had any input into the study design, data collection, interpretation of results, or conclusions.

20. Policy implications • Improve hospital quality information • Purposefully determined to ensure best way to represent and present attributes • Avoid potential perverse incentives from published quality information • Provide assistance to patients when making their choice • Patients may rely on choice heuristics. 60% of Australians have low health literacy • 85% of respondents would involve a GP in their decision • Reduce barriers (switching costs) to exercising choice • Travel distance and waiting times have a financial cost and opportunity cost • Patients may face an implicit budget constraint to choice • Help hospitals respond to patient preferences for quality • Accommodate shifts in patient demand (funding, workforce, infrastructure) • Better performance frameworks to identify quality ‘blackspots’ in hospitals